Sunday, October 19, 2014

Figures Don't Lie But Liars Figure––Will There Be Some Obamacare Rate Shock in 2015?

Hanging around actuaries as long as I have one of the old sayings I picked up was, "Figures don't lie, but liars figure."

I have read one story after another this summer and fall about the modest Obamacare rates increases––or decreases––for 2015.

On this blog you have also seen me write about the complex way the 2015 Obamacare rates will hit people particularly because of the impact the changes in the so called second lowest cost Silver plan will have on so many people's final subsidy. You have also seen me write about the fact that we really won't know what Obamacare costs people until the now unlimited Obamacare reinsurance program stops subsidizing insurance rates in 2017.

Recently, the Kaiser Family Foundation provided a report pointing out that the cost of the benchmark Silver Plan would fall 0.8% in sixteen cities they researched:



















Kaiser also reported that the lowest cost Bronze plan after tax credits in these markets would rise an average of 5.9%

But now, Investor's Business Daily is out with another look at those sixteen cities and they found that the cost of the cheapest Bronze Plan for a 40-year-old non-smoker earning 225% of the poverty level ($26,260) will jump an average of 13.9%.






















What's the big difference between the Kaiser Family Foundation's (KFF) approach and that of Investor's Business Daily (IBD)? IBD says the difference has to do with KFF assuming a person's income hasn't changed instead of rising at least with inflation and the impact a falling Silver baseline plan's cost has on the Bronze Plan subsidy (You can read the detailed explanation in IBD's article and get a link to the KFF study here).

Who's right? Or, who is more right? Or, which assumptions are the most representative? Or, more fair? Or, would this outcome have been different if the researcher would have used 250% or 175% of the poverty level instead of 225%?

I don't think that any of that is the real point (although it would appear that the Kaiser Family Foundation failed to tell us about the whole picture when they issued their study).

I will suggest the important point here is that for people to know how Obamacare will really impact them in 2015 they need to take a look at what Obamacare is offering them for 2015.

But these consumers can't now know the real impact in the 36 federally run insurance exchanges and most states that run their own exchange

Because in the federal states the Obama administration won't open the websites or let carriers post their new rates until the Obama administration signs off on the 2015 rates.

And, the administration has said that won't happen until a few days after the upcoming November 4th election.
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